A senior costs judge has warned law firms that they may soon have to set out their costs at the outset of cases as part of a radical clampdown on escalating fees.

Speaking at the Legal Week Litigation Forum on 19 September, Master Whitaker said the Civil Procedure Rules Committee had set up a working group to tackle the problem of escalating litigation costs.

He told the top-level conference that the committee, which was due to hold its first meeting next month, would seek "radical" measures to control costs.

"We will be looking at the things that Woolf shied away from," said Whitaker, who will be promoted to the post of senior costs master at the Queen's Bench Division next month. "There is no doubt that cost budgeting will be coming up the agenda very soon."

Under cost budgeting, firms would be expected to provide binding estimates of their costs at the outset of cases and would risk court sanctions if they subsequently failed to stick to their budgets.

Whitaker called on leading City firms to provide feedback to the committee, chaired by Mr Justice Jackson, on the best ways of controlling costs. It comes in the wake of the controversy following the collapse of the Bank of England/BCCI trial, which racked up more than £110m in fees.

Although Lord Woolf's 1999 overhaul of Civil Procedure Rules raised the possibility of introducing cost budgeting, it was dropped following trenchant opposition from the profession. The issue remains contentious. This summer, the Civil Justice Council omitted any mention of cost budgeting in a list of recommendations to the Government.

However, the conference heard that clients were forcing firms to get better at predicting costs.

"Clients know exactly what things should cost and will drive the agenda for change," said Herbert Smith litigation chief Sonya Leydecker. "Firms that find new solutions to costs will sweep up the work."

Speaking after the conference, Leydecker warned that the profession was likely to maintain its resistance to the imposition of fines for exceeding estimates.

She added: "I am not sure if the profession would be comfortable with this, but whether it is the right thing is a different matter."

Slaughter and May disputes partner Sarah Lee said: "There is increasing pressure on law firms to have cost estimates which are accurate and adhered to."

Freshfields Bruckhaus Deringer litigation partner Raj Parker commented: "It is definitely time for a fresh look at the way the profession charges for disputes."